- WASHINGTON - With oil near
$50 a barrel, the Bush administration is set to allow oil refineries to
borrow from the government's emergency petroleum stockpile to make up for
supplies disrupted by Hurricane Ivan, a congressional source briefed on
the pending decision told Reuters last week.
-
- The oil would be loaned from the 670-million-barrel Strategic
Petroleum Reserve to two refineries for two to three weeks, said the source,
who did not know the names of the energy companies requesting the oil.
-
- A separate government source told Reuters that one of
the loans would be for 100,000 to 200,000 barrels, and the other for 1
million to 2 million barrels.
-
- White House spokesman Scott McClellan said the Energy
Department was reviewing the oil loan requests from Gulf Coast refiners
"to make sure that our system continues to operate until production
and imports can resume."
-
- "We've always said that the Strategic Petroleum
Reserve was set up to protect against physical disruptions of oil supplies,
such as national emergencies or natural disasters, and not to manipulate
prices of oil for political purposes, and certainly Hurricane Ivan had
an effect on the temporary supply of oil imports and production,"
McClellan said.
-
- However, an aide to Democratic presidential challenger
John Kerry accused the Bush administration of playing politics with the
nation's oil stockpile less than six weeks before the U.S. presidential
election.
-
- Sen. Kerry has for months called for the administration
to temporarily suspend shipments to the reserve to help lower crude oil
and gasoline prices.
-
- "America needs a president that listens to the needs
of families struggling to pay their energy costs at all times - not just
when a few oil refineries weigh in and not just a few weeks before the
election," Kerry campaign spokesman Phil Singer said last week.
-
- The Bush administration has failed to offer "real
world solutions to the energy prices that have been strangling the economy,"
Singer added.
-
- U.S. commercial crude stocks fell 9.1 million barrels
to 269.5 million barrels last week, their lowest since Feb. 6, the U.S.
Energy Information Administration said last week.
-
- Hurricane Ivan thrashed through the Gulf of Mexico last
week, disrupting offshore oil production and coastal refinery operations.
The effects of Ivan had shut in 9.6 million barrels of oil output from
the gulf, according to government figures.
-
- U.S. oil prices jumped as high as $49 a barrel last week
at the New York Mercantile Exchange as traders said the oil loans would
not be enough to replenish inventories.
-
- President Bush has insisted that the reserve must be
filled to its 700 million barrel capacity to counter any disruption in
oil supplies that might be caused by terror groups or natural disasters.
-
- A spokesman for the American Petroleum Institute, the
main trade group for major oil companies, said: "In general we support
the use of the SPR if there is an emergency situation."
-
- However, he would not say if the API believes the current
supply shortage caused by Hurricane Ivan was an emergency situation. "It's
up to the president to decide," he said.
-
- In October 2002 there was a short-term loan of oil from
the reserve due to supply disruptions from Hurricane Lili.
-
- The congressional source said the oil for the new loans
would come from the reserve's four storage sites in Texas and Louisiana,
or by diverting oil deliveries to the stockpile and sending them to the
refineries.
-
- Energy companies that are scheduled to deliver crude
to the reserve have also made a request to delay those shipments, the government
source said.
-
- It is possible that oil could instead be sent to the
refineries asking for the reserve's crude.
-
- Exxon Mobil Corp. (XOM.N: Quote, Profile, Research) ,
Royal Dutch/Shell Group's (RD.AS: Quote, Profile, Research) (SHEL.L: Quote,
Profile, Research) Shell Oil, Atlantic Trading and Marketing Inc., Glencore
Ltd. and Koch Supply and Trading LP won six-month contracts last February
to deliver an average 100,000 barrels of oil a day to the reserve through
the end of this month.
-
- At least 11 refineries on the U.S. Gulf Coast shut or
reduced operations because of Hurricane Ivan.
-
- Market sources said the most likely refineries to have
asked for SPR crude were Motiva's Norco refinery and ExxonMobil's joint-venture
Chalmette plant, both in Louisiana. The companies did not immediately comment.
-
- The reserve was created by Congress in the mid-1970s
after the Arab oil embargo and stores its million of barrels of crude in
underground salt caverns.
-
- (Additional reporting by Steve Holland and Caren Bohan)
|